Online university Grand Canyon Education ( LOPE) went public recently, the first U.S. company to win that honor since Rackspace's ( RAX) IPO. Remember that? It was way back on Aug. 8, making for longest IPO drought since the mid-1970s. Rackspace is trading at $6 and change -- half its $12.50 offering price -- and it traded as low as $4.47 in October. Grand Canyon has done better, much better. After cutting its price from a range of $18-$20 to a range of $12-$14, Grand Canyon debuted last month at $12 a share. After rallying 10.1% Wednesday, the stock posted its highest closing price in its short history. Grand Canyon was hailed as evidence that the IPO market was still working -- if investors could only be enticed by strong fundamentals. Most of the coverage was favorable to the company, if skeptical that the IPO market would come roaring back any time soon. Sure, Grand Canyon Education has the promise of strong growth, even perhaps in lean times. But its prospectus is very much a mixed bag of enticing financials and red flags. Among the latter: a federal investigation, a whistleblower lawsuit charging fraud and restatements of three years' worth of accounting. Baptists founded Grand Canyon University in 1949, and it remained a liberal arts nonprofit school until 2004, when a group of outside investors bought all of its non-real estate assets for $500,000 and assumed its liabilities. Three months later, they came back and bought the real estate for $27 million.